Editing Monopoly (section)

{{short description|Market structure with a single firm dominating the market}}
{{about|the economic term|the board game based on this concept|Monopoly (game){{!}}''Monopoly'' (game)|other uses}}
{{distinguish|Monopoli}}
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{{Competition law}}
{{restrictive market structures}}

A '''monopoly''' (from [[Greek language|Greek]] {{langx|el|μόνος|mónos|single, alone|label=none}} and {{langx|el|πωλεῖν|pōleîn|to sell|label=none}}) is a market in which one person or company is the only supplier of a particular good or service. A monopoly is characterized by a lack of economic [[Competition (economics)|competition]] to produce a particular thing, a lack of viable [[substitute good]]s, and the possibility of a high [[monopoly price]] well above the seller's [[marginal cost]] that leads to a high [[monopoly profit]].<ref>{{Cite book |last1= Blinder |first1= Alan S |first2= William J |last2= Baumol |first3= Colton L |last3= Gale |title= Microeconomics: Principles and Policy |type= paperback |date= June 2001 |publisher= Thomson South-Western |page= [https://archive.org/details/microeconomicspr0000baum/page/212 212] |chapter= 11: Monopoly |isbn= 0-324-22115-0 |quote= A pure monopoly is an industry in which there is only one supplier of a product for which there are no close substitutes and in which is very difficult or impossible for another firm to coexist |chapter-url= https://archive.org/details/microeconomicspr0000baum/page/212 }}</ref> The verb ''monopolise'' or ''monopolize'' refers to the ''process'' by which a company gains the ability to raise prices or exclude competitors. In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge [[Monopoly price|overly high prices, which is associated with unfair price raises]].<ref name=Orbach&Campbell>{{cite journal | first1 = Barak | last1 = Orbach | first2 = Grace | last2 = Campbell | ssrn = 1856553 | title = The Antitrust Curse of Bigness | journal = Southern California Law Review | year = 2012}}</ref> Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market).<ref name=Orbach&Campbell />

A monopoly may also have monopsony control of a sector of a market. A [[monopsony]] is a market situation in which there is only one buyer. Likewise, a monopoly should be distinguished from a [[cartel]] (a form of oligopoly), in which several providers act together to coordinate services, prices or sale of goods. Monopolies, monopsonies and [[oligopolies]] are all situations in which one or a few entities have [[market power]] and therefore interact with their customers (monopoly or oligopoly), or suppliers (monopsony) in ways that distort the market.{{citation needed|date=December 2012}}

Monopolies can be formed by mergers and integrations, form [[natural monopoly|naturally]], or be established by a government. In many jurisdictions, [[competition law]]s restrict monopolies due to government concerns over potential adverse effects. Holding a dominant position or a monopoly in a market is often not illegal in itself; however, certain categories of behavior can be considered abusive and therefore incur legal sanctions when business is dominant. A [[government-granted monopoly]] or ''legal monopoly'', by contrast, is sanctioned by the state, often to provide an incentive to invest in a risky venture or enrich a domestic [[advocacy group|interest group]]. [[Patent]]s, [[copyright]]s, and [[trademark]]s are sometimes used as examples of government-granted monopolies. The government may also reserve the venture for itself, thus forming a [[government monopoly]], for example with a [[state-owned company]].{{citation needed|date=June 2012}}

Monopolies may be [[natural monopoly|naturally]] occurring due to limited competition because the industry is resource intensive and requires substantial [[overhead (business)|costs]] to operate (e.g., certain railroad systems).<ref>{{cite journal |last1=OECD |title=Railways: Structure, Regulation and Competition |journal=Policy Roundtables |date=1997 |pages=7 |url=https://www.oecd.org/daf/competition/sectors/1920239.pdf |access-date=April 20, 2022}}</ref>